Multifamily kicks it into high gear
According to the U.S. Department of Commerce, housing starts rose 15 percent in September, the best pace in new home construction since April 2010. Builder confidence rose in October, but most of the traction gained in housing was in multifamily which has seen a rise in ground breakings as demand continues to rise in the rental market.
Single family housing starts did rise 1.7 percent, making up ground that was lost in August. Multifamily starts rose an astonishing 51.3 percent, reaching the highest level since October of 2008 around the time the economy came to a screeching halt.
In September, the Western region saw the largest increase in housing starts, jumping 18.1 percent while the South rose 15.7 percent, the Northeast region jumped 12.7 percent and the Midwest rose 9.3 percent.
Builders putting crews back to work
“Today’s numbers are very welcome evidence that builders are putting some crews back to work on single-family homes in select markets where economic conditions are improving, and on multifamily homes in places where demand for rentals is on the rise,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB). “That said, extremely tight lending conditions for both building and buying new homes, along with stubbornly high foreclosures that are putting downward pressure on home prices, continue to weigh down new construction and corresponding job growth.”
“The big gain in multifamily housing production for September was in the wake of a below-trend number in August and in keeping with characteristic volatility in that sector,” said NAHB Chief Economist David Crowe. “However, there’s no doubt that demand for apartments is rising as restrictive mortgage lending policies and concerns about future employment push consumers to pursue rental options.”
Building permits are down
Building permits dropped five percent in September after a substantial jump in August, but economists are not fretting. Single family permits remained stagnant while multifamily dropped 14.5 percent (although again, in the same month, there were a lot of starts).
“Single-family starts showed a slight uptick for the month, which was right in line with our forecast for the third quarter and in keeping with what builders have been telling us in recent surveys regarding the emergence of improving conditions in select local housing markets,” said Crowe.